Why Cunliffe's appointment to the Bank of England matters

Sir Jon Cunliffe being knighted Sir Jon Cunliffe has been praised for his knowledge of European affairs

So what does the appointment by the Chancellor of Sir Jon Cunliffe as deputy governor of the Bank of England, with responsibility for financial stability, tell us?

Three things.

1) The Chancellor is seriously concerned that the eurozone bloc will constantly and consistently vote against the UK's interests when it comes to the regulation of banks and financial businesses.

Cunliffe knows the mandarins, central bankers and regulators of Europe better than anyone.

So the thinking is that if anyone can head off new rules perceived as damaging to the UK at an early enough stage, to pre-empt a political battle that Britain can never win (as a euro out, we don't have the votes), it may be him.

2) The Treasury became seriously alienated from the Bank in the dying days of Mervyn King's tenure as governor.

Mervyn King's attack on the Chancellor's new financial guarantees for some mortgage borrowers still rankles.

But more importantly, and as I have mentioned before, the Treasury was incensed that the Bank of England's Prudential Regulation Authority announced the imposition of a new leverage ratio on banks, to strengthen them, in a way that could have seriously impaired the ability of Barclays and Nationwide to provide vital credit.

The announcement was something of a bolt from the blue for the Treasury. And since then there has been a good deal of scrabbling around, to phase in the new requirement for both Barclays and Nationwide to hold additional capital in a way that doesn't crunch their short-term capacity to lend.

The point about Cunliffe is, that as a former Treasury second permanent secretary, he is unlikely to spring such unpleasant shocks on his erstwhile colleagues.

3) The new governor regards a strong, amicable relationship with the Treasury as essential to his ability to do his job.

George Osborne would never have appointed Cunliffe against his wishes.

As I pointed out a few weeks ago, the Treasury was never going to appoint either of the Bank of England candidates, Andy Haldane and Paul Fisher.

Carney did not die in a ditch to alter the Treasury's conviction that this job should not go to a Bank insider.

Robert Peston Article written by Robert Peston Robert Peston Economics editor

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  • rate this

    Comment number 24.

    JIM D if the cap fits buddy wear it .

  • rate this

    Comment number 23.

    "The point about Cunliffe is, that as a former Treasury second permanent secretary, he is unlikely to spring such unpleasant shocks on his erstwhile colleagues."

    That makes him sound like Sir Humphrey Appleby. Bank of England "independence" has become Yes Minister!

  • rate this

    Comment number 22.

    Perhaps we can take party politics out of this discussion for a change?

    Why prop up an over inflated housing market? Votes.

    Why support a parasitic Banking Industry? Buying Votes. (BBA biggest lobbying spenders by a City Mile)

    Is the BoE privately owned? Is the FED privately owned? (Yes and yes). Rothschild.

    BoE's remit is to make the Govt of the day appear credible. Appalling.

  • rate this

    Comment number 21.

    I cant blame GO for the choices as he does what he is told from his lords and masters in the CoL.
    A Labour or Lib Dem chancellor would also toe the very same line.

    Nothing has been done to make our banks any safer and nothing will.

  • rate this

    Comment number 20.

    Sounds rather like HMT & the Chancellor of the Exchequer's grip on the Bank of England just became a whole lot tighter.

    Who will speak truth to power, when the CofEx fails to assess & understand the strategic economic & political challenges facing the UK again?

    What happens if Mr Osborne's party funding & political interests conflict with the national economic & he chooses his party's first?

  • rate this

    Comment number 19.

    3 Cyranoin
    "..financial services is the one major industry where the UK is the global leader"

    Obviously the UK cannot have been that good at financial services, given they were highly complicit in the global financial crisis, mismanaged their own banks (requiring a bailout), and tried to save themselves by screwing their customers over.

  • rate this

    Comment number 18.

    I hope this appt as well as the Carney appt will work under the Labour Govt from 2015-because they are clearly Gideon's appointees:he really didn't like Mervyn King standing up to him did he ( spoilt little Public School, Chinless Wonder, Rich-Boy that is our Chancellor for the next 2 years :(
    I actually think both appointments are good and hope they do well, now and when Labour returns in 2015 !

  • rate this

    Comment number 17.

    So Bob P, what you seem to be saying is, "hoorah, the Treasury has foisted one of its own into the independent central bank of the UK" - nice appreciation of independence Bob P. I look forward to the good old days of politicians meddling ... 15% interest rates for mortgage payers and businesses looking for long term investment strategies! That should ease the austerity!

  • rate this

    Comment number 16.

    Andrew Haldane should have been appointed Governor of The Bank of England let alone deputy.

    Perhaps the next Chancellor will see sense and appoint the right man.

  • rate this

    Comment number 15.

    Re my previous comment at 12
    Have had second thoughts.....
    Our nice MPs are not scared of the Eurozone....
    They are having a hard time trying to work out who we will vote for next time.
    Hope all of them think about that.

  • rate this

    Comment number 14.

    1.pl15 'Yet an other tory toff in a top job.'

    He came into government / HM Treasury in 2001. I think you'll find Labour were in power in 2001.


  • rate this

    Comment number 13.

    It’s the power of the banks here that’s cause for concern, they still seem to be all that politicians and civil servants ever contemplate.

    Anyone, including the EU that attempts to limit their power is flagged up as an “enemy of the state”.

    Shows you how far down that dangerous road we’ve come.

  • rate this

    Comment number 12.

    The biggest problem all three major Parties face..is not the Eurozone....
    They all wanted to join....with or without ......Democratic consent...
    They got what they wanted
    It would now seem that the Eurozone could be a bit of a problem.
    Has it not dawned on them that their fellow citizens could be a major part of any solution?

  • rate this

    Comment number 11.

    "The Chancellor is seriously concerned that the eurozone bloc will constantly and consistently vote against the UK's interests when it comes to the regulation of banks and financial businesses"

    No kidding,add that to,Immigration,UK rebate,or any thing that try`s to roll back federalism.The self inflicted damage caused by the Euro,on that central monolith,one could not plan its demise better

  • rate this

    Comment number 10.

    The BoE remains a politicized entity - not really a central bank in the traditional mould, but rather a unit that abuses statistics to push demagogues' attempts to bamboozle the public. Things cannot go on like this for ever - people are not daft. They can see and feel their impoverishment, see the crumbling infrastructure & potholed roads, see the urban chaos. I am reminded of the fall of Rome.

  • rate this

    Comment number 9.

    Tory MP Matthew Hancock said firms should consider recruiting locally over "the easy option" of hiring from abroad. In hiring Carney, George Osborne obviously did not agree.

  • rate this

    Comment number 8.

    Problem is, conduct of the BoE itself and the UK banks, together with the supervision of the latter & other financial services, does not - once again - have someone with that background at the top of the Bank of England.

    Looks to me that the BoE is making itself rather vulnerable should a 2007/08/09 situation crop up again.

  • rate this

    Comment number 7.

    Some top-team insight & humility, surely?

    Ordinary mortals can do no more than wonder at the role of patronage in the head-hunting, appointment and independence of these senior figures, servants of 'national institutions' in a society that might serve 'the value of money' as proxy for 'the national interest', but as easily might appease holders-not-to-be-hoarders, at prices to 'our' infinite loss

  • rate this

    Comment number 6.


    The point Alan is that he is a TREASURY SPY and PLANT.

    He is there to report on any deviation from the complete buffoons in HM Treasury's economically insane plans.

    The man is a plant and a spy.

  • rate this

    Comment number 5.

    He's only a Deputy. My Deputy simply filled in for me when I was on holiday.
    Some say Deputies are unnecessary if you have a good secretary.


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